The Danish Minister for Digitalization, Caroline Stage Olsen’s coffee consumption is a good example of the lack of political understanding of the telecommunications industry and its challenges

In June, GSMA and the Telecommunications Industry Association in Denmark (TI) hosted an event marking Denmark’s assumption of the EU presidency. The purpose was for GSMA, together with Denmark´s largest telecom organization TI, to highlight the challenges the telecommunications sector has faced in the EU for decades.

The keynote speaker was Minister for Digitalisation Caroline Stage Olsen, who in her speech described her views on the telecommunications world, the challenges they face and how they should be solved. Let’s be honest, she is a politician without much insight into the telecommunications world.

Strand Consult loves fact checks on political and regulatory pronoucements. We have used the Danish rules on transparency in the administration to gain access to Olsen’s speech, including the underlying notes.

Caroline Stage Olsen said she fears that consolidation of the telecommunications industry will result in rising prices for telecom products, and therefore regulators must interfere in a normal, free and maturing market.

At Strand Consult, we would like to quantify the fears expressed by Caroline Stage Olsen at GSMA and TI’s event in Copenhagen. We used Danish rules on transparency in the public administration to investigate how much her ministry and the subordinate agency responsible for the telecommunications sector spend on coffee and mobile telephony.

The question we tried to answer was whether the ministerial employees spend more on coffee or on mobile telephony. This in a world where coffee prices have exploded and where Denmark has chosen not to regulate coffee prices.

We uncovered that Caroline Stage Olsen’s ministry spends more than twice as much on coffee per employee as it does on mobile telephony. In her ministry, there are 95 employees. They spent DKK 129,436 on mobile telephony (over a 17-month period), corresponding to DKK 76 per month per employee. In the same period, the same employees spent DKK 264,815 on coffee from three suppliers (Coor, Nordic Roasting Co and Kontra), corresponding to DKK 188 per month per employee in the ministry.

At the Agency for Digital Government, where there are 560 employees who over the past 17 months have spent DKK 421,779 on mobile telephony, corresponding to DKK 44 per month per employee of the agency. In the same period, the Agency spent DKK 371,804 on coffee from a supplier, which corresponds to DKK 21,870 per month, corresponding to DKK 39 per month per employee of the Agency.  

It is very clear that both the ministry and the agency spend more on coffee than they spend on mobile telephony. If you look at what a cup of coffee costs at Starbucks, Joe & Juice and similar stores, you might be tempted to ask whether it is not more important to regulate coffee prices than the mobile market and mobile prices. 

Joking aside….

Let’s relate what Caroline Stage Olsen said at the GSMA/TI event to the facts.

1. Olsen said: “If further consolidation does not lead to higher levels of investments, end-users are likely to pay the price in terms of higher prices and lower quality.” The fact is that the Telia/Telenor merger was blocked in Denmark, and prices went up: The consequences of the failed Telenor Telia merger in Denmark and what it means for mergers in the UK, Italy and the global telecom market – Post Mortem Part II

2. Olsen said: “As cross-border consolidation may lead to few large pan-European players we are concerned about competition”. The fact is,that the synergies of cross-border consolidation are limited. This type of consolidation will not create synergies in a market in which and operator must buy spectrum in 27 countries and live under 27 different forms of telecom regulation implementation. In fact, we have seen the opposite happen in the EU over the past years as TDC, Telenor, Telia, KPN, Vodafone, Telefonica, BT and Deutsche Telecom have become less pan European. Strand Consult, has documented this extensively. See Everyone is talking about consolidating the European telecommunications market – Some believe that Margrethe Vestager will change her mind before she leaves the European Commission

3. Olsen said: “However, I believe we share the same objective: creating the necessary foundations for an effective European single market”. That is a fine statement, but the fact is that it cannot be implemented in practice. Spectrum policy is the barrier, and it cannot be fixed by Brussels. 10 reasons why EU spectrum harmonisation is a great idea but nearly impossible to implement

4. Olsen said: “In Denmark, we have had success with a competitive market with players of different sizes and you continue: We have a level of high-speed internet coverage that ranks among the best in the EU”. This has nothing to do with Danish policy. Rather it is the lucky result of a DKK 67 billion windfall when Danish energy sector were liberalized (the creation of the local energy companies, Energinet.dk and the creation of Dong/Ørsted) and the consumer owned energy compagnies invested in fiber. Those 14 energy companies FTTH compagnies today have consolidated down to 3, having endured gigantic losses.

5. Olsen said: “At the same time we also have lower consumer prices than many other Member States.” Indeed Danish mobile prices are low–so low that the ministry spends more on coffee than mobile telephony. Funny enough, the Consumer and Competition Authority does not share her view regarding broadband. See The Danish Competition and Consumer Authority is taking a closer look at the broadband market, and this despite the fact that Denmark has some of the very low broadband prices in the EU.

6. Olsen said: “That is why I am worried that consolidation could lead to fewer investments and less competition”. Again the minister’s staffer do not appear to be updated on the global reality. Around the world, consolidated mobile markets now exceed the EU in 5G coverage and quality including United States, India, Japan, South Korea, Brazil and others. One might be tempted to ask whether the minister can name some countries where things have developed negatively, as she fears, after the market has been consolidated. The fact is, in all the markets to which I refer, consolidation has resulted in citizens gaining access to better infrastructure. Today, the citizens of India have access to better 5G infrastructure than many Europeans. See Is telecoms consolidation in Asia, Africa, Latin American and Europe a challenge?  

7. Olsen said: “Based on our experiences, I believe it is possible to strive for both competition in the telecommunications market and competitiveness for Europe. The Danish case shows that the two can support each other.” Again, the minister forgot to look at Denmark’s exception, in which the energy sector invested a part of their DKK 67 billion in fiber. These energy companies do not have a required rate of return on investment, versus the expectations of telecom investors. It appears that Minister has not invested the Danish telecommunication industry’s financial. The historical facts document that Denmark has been a bad investment in the eyes of investors. The list is long: Telia, Telenor, Orange, 3, the energy companies and most recently the TDC case, where ATP, PFA and PKA have lost more than DKK 13 billion on their DKK 20 billion investment in TDC: The three Danish pension funds ATP, PFA and PKA sell their share of TDC to Macquarie at a big loss. What went wrong and what’s ahead?

8. Olsen said: “For six months starting in July, we will use our Presidency to drive forward the Council’s work acting as an honest and neutral broker”. However a high-minded statement, Olsen is skirting the most critical EU issue: the failure of some European mobile operators to implement the 5G security toolbox in certain countries. See Is there a correlation between European nations’ level of Chinese telecom equipment, the consumption of Russian energy, and military aid to Ukraine?. Sadly some EU countries have mobile networks built by what the EU calls “untrusted vendors”. This is a huge problem for European security and NATO ability to engage on the continent. See How to ensure NATO’s next generation weapons access to modern communication solutions

Olsen’s lack of facts does not surprise Strand Consult, which has covered the Danish market for over 28 years. Politicians prefer platitudes to facts. Strand Consult suggests that Olsen and her team use their over-caffeinated brains to review the facts, rather than spreading myths.

Strand Consult has studied telecom regulation for over 28 years. We have always said that regulation should be based on evidence. We can see that the people who have fed the minister with knowledge do not have the insight into the market that one should expect a minister with as much responsibility as she does to have access to.

Denmark is making major investments in defense in connection with the EU presidency, but it has overlooked one of NATO’s biggest problems, access to secure telecommunications infrastructure. NATO wants modern weapons which require secure telecommunications. However, these NATO weapons can’t be used if they run over unsecure Chinese equipment. I hope that Caroline Stage Olsen agrees with me that EU and NATO must use secure solutions which do not include risky Chinese elements. See my speech on this topic at the Spanish Senate at the end of May: The new geopolitical reality: how to build and protect information society infrastructure.

Strand Consult always tries for constructive dialogue with political leaders and it gives them multiple opportunities to engage and response. We have tried to have a constructive dialogue with Caroline Stage Olsen. Strand Consult sent Caroline Stage Olsen an email on July 3rd, followed by three reminders. We received no response. We can only conclude that the minister and her team did not like that we dare to expose their lack of facts and their excessive coffee consumption.

The Danish people who are under the tutelage of this minister deputized for digitization policy deserves better, fact-based leadership. Moreover, the people of the European Union who are under Danish leadership for this term and who consider Denmark as a role model for digitization also deserve fact-based leadership. Instead, she traffics in myth, particularly as the European Union’s digital development has stagnated. More consolidation is the single most important policy change that the EU must make to improve its failing performance, and political leaders can’t bring themselves to say it. 

Strand Consult’s one goal is to create transparency. Check out our library of fact checks on political leaders like Caroline Stage and others. https://strandconsult.dk/category/fact-check/ We welcome any contact from Caroline Stage Olsen and are happy to correct any errors.